As long as people need to eat, there will be demand for commodities such as wheat, barley, rapeseed, sunflower and corn. Surprisingly however, this demand is not being met by adequate supply; which in turn is driving food prices to be the highest ever.
Despite the agriculture futures market increasing its capacity from US$40bn to US$200bn (from March 2007 to March 2008), it has not kept pace with investment demand for soft commodities.
Furthermore, the economic situation in Ukraine has resulted in a significant difference in the cost of agricultural land compared to other parts of Europe, allowing investors to capitalise on the gap and invest at below market value prices.
Agricultural land prices per hectare in Argentina (US$4,400–7,800), the US (US$4,500–28,000) and Western Europe (US$13,200–32,200) far exceed the cost in Ukraine, which is surprising considering 40% of the planet’s black earth soil located there.
Liquid investors have the opportunity to purchase at US$1,000 per hectare.
There are two ROI streams:
- Annual income from the harvest
- Capital growth appreciation from the land on exit